AIA Expresses Support for Louisiana File and Use Bill

The American Insurance Association (AIA) applauded the passage in the Louisiana House of Representatives of a proposal that would improve the rate approval process for commercial insurance carriers. The House passed the measure, House Bill 1514, unanimously on May 10, 2004.

“Louisiana has historically been a tough state for insurance companies, but this bill would go a long way toward encouraging more insurers to write new business in the state,” said John Marlow, AIA assistant vice president, Southwest Region. “By implementing a file and use rating system, Louisiana would join the mainstream of other states with regards to commercial lines rate filing systems.”

HB 1514, sponsored by Rep. Karen Carter (D), would change the way insurers file their commercial rates from the current flex band rating system to a file and use system. Workers’ compensation and medical malpractice would not be included under the new system. Currently, insurers must present their rate filings before the Louisiana Insurance Rating Commission (LIRC) to gain approval for any rate decrease or increase.

Under file and use, insurers would submit their rate filings to the Department of Insurance’s Office of Property and Casualty and wait 45 days before implementing the new rate. The rate filing is deemed authorized unless it is disapproved in writing from the Office of Property and Casualty during the waiting period. Any filing that is disapproved can be appealed within 15 days before the LIRC.

“The flex band rating system passed last year was a good first step toward making the insurance market in Louisiana healthier. By implementing a file and use system for commercial lines, employers will benefit from increased competition and have more flexibility in getting the coverage to meet their business needs.” said Marlow.

HB 1514 passed the Louisiana House of Representatives by a vote of 99-0 and is expected to be heard in the Louisiana Senate Insurance Committee in the next couple of weeks.